The Vanguard Group made news recently when it announced it would reduce the number of funds available to its investors. The goal, the fund said, is to minimize confusion.
Jack Bogle, the legendary finance expert who founded Vanguard (but who no longer runs it) said in an interview with Fox News that the fund could reduce the number even further.
“You could run a retirement plan with three or four choices: a stock index fund, a bond index fund [and] a balanced index fund,” Bogle told Maria Bartiromo.
Bogle earned his fame by simplifying the investment equation for everyday investors trying to save for retirement. So I won’t disagree with him, but I will add a line or two to his formula.
While Bogle is concentrating on accumulating savings through asset allocation – which is good as far as it goes – I want investors to develop a strong income allocation plan at and after retirement. This way, their savings will provide enough income throughout their retirement.
To create that income allocation plan, you need to add income annuities as a new asset class to the funds that Mr. Bogle suggests.
Learn more about income annuities at Go2Income.